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2007-SC-000126-DG
LES BROWNLEE, ACTING SECRETARY,
U.S . DEPARTMENT OF THE ARMY; AND
UNITED STATES OF AMERICA APPELLANTS
ON REVIEW FROM COURT OF APPEALS
V CASE NO. 2005-CA-002255-MR
HARDIN CIRCUIT COURT
NOS . 03-CI-02191 AND 04-CI-00454
COMMONWEALTH OF KENTUCKY,
KENTUCKY UNEMPLOYMENT INSURANCE
COMMISSION; CHARLOTTE J. BOOTHE ;
RITA F. HOCKMAN; CAROLYN J . JONES;
SHEILA F. LUCAS ; PAULA M. OLIVE;
REBECCA J . YATES ; AND BEVERLEY Y.
HOUSE APPELAEES
OPINION OF THE COURT BY JUSTICE NOBLE
REVERSING
The Appellants, Les Brownlee (Acting Secretary, U. S. Department of the
Army) and United States of America, appeal the Opinion of the Court of
Appeals affirming the Hardin Circuit Court's ruling that the Kentucky
Unemployment Insurance Commission (KUIC) properly awarded unemployment
benefits to the individual Appellees. Because the Appellees voluntarily left their
employment by taking early retirement and a cash incentive, and cannot
establish that they did so because of good cause attributable to the
employment, the Opinion of the Court of Appeals is reversed.
I. Background
In 2002, the Appellants (Army) decided to hire a private contractor
through the bid process to perform the job functions of approximately 160
civilian employees, among whom were the individual Appellees . In February,
2003, the Army did a "mock" Reduction in Force (RIF) that told the employees
how they would be affected when the contractor took over. The Appellees' jobs
were being abolished as such, but they were offered continued employment,
though their job duties would change. Their salaries would remain the same
for two years, and then would adjust according to some percentage of the cost
of living index. However, the Army could not guarantee that there would be
any work after July 31, 2003, when the contractor took over.
That same month, the Army offered a Voluntary Early Retirement
Program which included a Voluntary Separation Incentive (VSI) of $25,000
cash . If an employee's position had been abolished, and she was eligible for
early retirement, then this option could be taken and the employee would not
be a part of the RIF.
The mock RIF had four categories of change for the various employees,
but the individual Appellees were all eligible for early retirement and the VSI .
According to the Order of the KUIC, they had two weeks to make their decision.
All of them chose the early retirement and cash incentive.
Subsequently, each individual Appellee filed a claim for unemployment
benefits, all of which were at first denied. This began the appeals, and the
Appellees have prevailed through the KUIC, the Hardin Circuit Court, the Court
of Appeals, and are now before this Court on discretionary review .
2
II. Analysis
Unemployment benefits are established by statute, and administered by
the Kentucky Unemployment Insurance Commission . Under the facts of this
case, KRS 341 .370(1)(c) is specifically controlling as it deals with when an
employee who has voluntarily left the job can receive unemployment benefits .
In fact, the statute sets forth when an employee is disqualified from receiving
benefits, and only provides an exception when the employee has voluntarily left
employment if there is "good cause attributable to the employment ."'
The parties have addressed the issue before the Courtgood cause
attributable to the employmentas a case of first impression. However, there
have been several appellate decisions on this issue since this Court announced
when good cause attributable to the employment applied, in order to require
the payment of unemployment benefits, in Kentucky Unemployment Ins.
Comm'n v. Murphy , 539 S.W.2d 293 (Ky. 1976) . It is true, though, that this
particular fact situation involving a RIF has not been specifically addressed.
In Murphy , a waitress who refused to comply with the employer's dress
code was found not to have "good cause" attributable to the employment to quit
her job, and thus was not entitled to unemployment benefits. The Court held
that good cause can be found "only when the worker is faced with
1 KRS 341 .370(1)(c) provides :
(1) A worker shall be disqualified from receiving benefits for
the duration of any period of unemployment with respect to
which :
(c) He has left his most recent suitable work or any
other suitable work which occurred after the first day of the
worker's base period and which last preceded his most
recent work voluntarily without good cause attributable to
the employment. . . .
circumstances so compelling as to leave no reasonable alternative but loss of
employment ." Id . at 294 . Since that time, our appellate decisions have offered
little consistency to establish a test as to what would constitute sufficiently
compelling circumstances, attributable to the employment, that would make
quitting the job the only reasonable alternative .
For example, this Court has found good cause attributable to the
employment when an employer moved the business to another state, Brock v .
Kentucky Unemployment Ins. Comm'n , 693 S.W .2d 69 (Ky. App. 1989), but the
Court of Appeals has said that acts of racial harassment at work were not so
compelling as to require the payment of benefits after an employee quit
because of them, Thompson v. Kentucky Unemployment Ins . Comm'n, 85
S.W.3d 621 (Ky. App. 2002) . Since the vast majority of reported cases on this
issue are from the Court of Appeals, this Court has had scant opportunity to
address whether Murphy is being applied as intended. However, these two
cases illustrate that the test is not as clear as it can be.
A. "Good Cause Attributable to the Employment"
Analysis must begin with the plain language of the statute, which
requires "good cause" to leave one's job to be "attributable to the employment ."
Inherent in that language is the idea that work conditions must be sufficiently
bad that the employee can reasonably feel compelled to quit. This concept has
been expressed in civil rights cases as "constructive discharge," and this Court
agrees with the trial court that the terminology is not used in the
unemployment insurance legislation . Yet that is precisely the effect of
establishing good cause attributable to the employment in order to obtain
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unemployment benefits. The employee must establish that the conditions of
the job are such that any reasonable person would believe he had no
alternative but to quit. This is the standard established in Murphy.
This Court has also spoken to another term used in the statute:
"voluntarily ." In Kentucky Unemployment Ins. Comm'n v . Young , 389 S .W.2d
451 (Ky. 1965), the court determined that separation is voluntarily initiated by
the employee when the act of leaving is "freely given" and proceeds from
personal choice and consent. Obviously, the facts must be considered anew in
each case, but they must be viewed through the lens of what the statute
requires when an employee makes the choice to leave the job and then seeks
unemployment benefits .
If an employee makes the choice to leave the job from among several
options available to her, the idea that she was compelled to quit by the
conditions of the job is suspect. If she then seeks to be paid unemployment
benefits after she has made her choice, it is appropriate that she have the
burden of establishing that she had good cause attributable to the employment
to leave before she can prevail .
The most analogous cases to this one that this Court has decided are
Kentucky Unemployment Ins. Com'n v .Kroehler Mfg. Co. , 352 S.W.2d 212 (Ky.
1961), and Kentucky Unemployment Ins . Comm'n v. Reynolds Metals Co. , 360
S .W .2d 746 (Ky. 1962) . In these cases, employees voluntarily participated in a
plan or were party to a collective bargaining agreement that approved a
retirement plan which provided for mandatory retirement at a certain age. By
participating in the benefits of the agreement, the employees also accepted the
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mandatory retirement age . This Court held that when the appropriate age was
reached, the employees entered into a voluntary retirement, and thus there
was not good cause attributable to the employment sufficient to allow
unemployment benefits . Germane to that decision was the employees' freedom
to choose . In Kroehler, the Court commented on early retirement, and
referenced an earlier foreign case, Campbell Soup Company v. Board of Review,
100 A.2d 287 (N.J. 1953), which held that an employee electing to retire before
full retirement age did so voluntarily, whatever his or her reason.
That an employee simply does not like job conditions or the proposed
terms of an agreement or offer from the employer does not rise to the level of
compelling an employee to leave the job . The difference in perspective is
whether the employee is driven away, versus simply choosing to leave for
greater satisfaction . In Kentucky Unemployment Ins. Comm'n . v Day, 451
S .W.2d 656 (Ky. 1970), this Court denied unemployment benefits to a
production line worker who quit because he simply believed that he could not
work on the newly converted line, a subjective belief. Subjective views about
the conditions of employment will not establish good cause attributable to the
employment . As Murphy established, the conditions must be such that the
objective, reasonable person would agree that the circumstances compel the
belief that there is no reasonable alternative to leaving the job .
Applied to this case, this reasoning leads to the conclusion that the
Appellees cannot establish good cause attributable to the employment
sufficient to entitle them to unemployment benefits . The Army gave all the
employees notice in February, 2003, that their employment status would
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change through the "mock" RIF. All the Appellees were told that they would
remain employed with their salaries guaranteed for two years, though they
would be reassigned, and no work was guaranteed after July 31, 2003 . That
same month, the VSI was offered which allowed employees whose current jobs
had been abolished, and who were eligible, to take early retirement and receive
a lump sum incentive payment of $25,000 .
At that point, the Appellees had these choices: continue working, accept
any new placement, and either retire or draw unemployment benefits if there
was no work after July 31, 2003 or if it ended in two years ; take early
retirement at the present time and receive an added bonus of $25,000 ; or quit .
Either way, under the first two choices the Appellees would be receiving
income, whether from working or drawing their retirement with the cash nest
egg. What they did not have was the choice of refusing both of the first two
options and then receiving unemployment benefits . If they had done that, then
they would simply be quitting their employment based on the subjective view
that they did not like either option offered to them, and would not be able to
establish good cause attributable to the employment . If they stayed with the
job, they were to get the same salary for two years, and if at the end of that
time the working conditions were such as to compel them to believe they had
no choice but to leave, they could obtain unemployment benefits then. If no
work materialized after July 31, 2003, they could apply for unemployment
benefits immediately. Continuing to work would have protected their
unemployment benefits rights .
However, by choosing early retirement and the cash incentive, the
Appellees chose an alternate source of income from that which normally is
obtained by working. The retirement benefits are in lieu of the salary they
would make if employed . Under this scenario, they cannot be said to be
"unemployed" any more than any other retiree is. Unemployment benefits are
intended to bridge the gap between losing one job through no fault of the
employee until the next job can be obtained. As this Court held in Barnes v.
Hall, 285 Ky. 160, 146 S .W.2d 929 (1940), unemployment insurance legislation
was enacted " . . .for the compulsory setting aside of unemployment reserves to
be used for the benefit of persons unemployed through no fault of their
own. . . as a part of a national plan of unemployment compensation and social
security." The money available is not unlimited, and unemployment benefits
are subject to time limitations .
It is important to note that while the Appellees' choices were limited, this
does not mean that the choice they made was not voluntary. Though tenuous,
the working conditions were not such that they were compelled to believe they
had no choice but to quit or retire, especially when in fact employment was
being offered to them, or a cash bonus retirement package. That they had to
choose early retirement in order to get the $25,000 cash simply embodies the
essence of an incentive. It may be hard to turn down an attractive deal, but
the ability to choose rests solely with the person having the option . There is no
compulsion, or there would be no need for an incentive . The nature of this
choice was well-expressed in Kehoe v. Minnesota Dep't of Economic Sec . , 568
N .W .2d 889, 891 (Minn. Ct. App. 1997), as was cited by Appellant : "[w]hen an
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employee has the choice of remaining employed or voluntarily resigning and
receiving a bonus, the termination of his employment is without good cause
attributable to his employer."
The decision to take the early retirement with the cash incentive was
voluntary, and there was nothing about the work conditions, other than a
subjective belief, that would lead the Appellees to feel compelled to leave their
employment or to retire. This is true even though they may have felt pressure
from the uncertainties, and even though they may have been partly motivated
by altruism toward employees who could not retire and needed their job
placement. They cannot show good cause attributable to the employment
sufficient to remove the voluntary nature of their choice to retire in order to
entitle them to unemployment benefits . For this reason, the decision of the
Court of Appeals must be reversed.
B. Consolidated Filing Not a Waiver
Appellants also complain that the lower courts gave short shrift to their
request for review of the evidence on each individual Appellee's claim, instead
generalizing the claims to apply in blanket fashion to all. The Court of Appeals
noted that while the trial court had employed a net result analysis, it was the
Appellants who had brought a joint complaint, and that they therefore could
not be heard to complain if they got a joint ruling. This misses the point.
While this case is being reversed on the substantive issue, this Court
would note for future application that if a claimant makes a claim of good
cause attributable to the employment, then she bears the burden of
establishing that cause through the facts and circumstances as they directly
9
relate to her. That Appellants filed a joint appeal with the circuit court does
not remove this burden. The opinion of the circuit court is extremely well-
written, and shows serious consideration of the applicable law, but does not
address the specifics of the individual Appellees . However, each was
specifically addressed by the Commission, and the circuit court had the benefit
of that record, as does this Court. The record is sufficient to make the proper
legal application, and for the reviewing courts to determine whether the
findings of the Commission were supported by substantial evidence in the
record . On review, this Court has determined that they were not, as set forth
above .
III . Conclusion
Because the Appellees voluntarily chose early retirement and the cash
incentive, and because they cannot establish that the conditions of
employment were such as to compel them to believe that they had no choice
but to take early retirement and thereby leave employment, the decision of the
Court of Appeals is reversed.
All sitting. All concur .
COUNSEL FOR APPELLANTS :
David L. Huber
Michael D. Ekman
Assistant U.S . Attorney
510 West Broadway, 10th Floor
Louisville, Kentucky 40202
COUNSEL FOR APPELLEE, COMMONWEALTH OF KENTUCKY, KENTUCKY
UNEMPLOYMENT INSURANCE COMMISSION :
Randall Keith Justice
Education Cabinet
Office of Legal Services
500 Mero Street
3rd Floor Capital Plaza Tower
Frankfort, Kentucky 40601
Amy O'Nan Peabody
Kentucky Retirement Systems
1260 Louisville Road
Frankfort, Kentucky 40601
COUNSEL FOR APPELLEES, CHARLOTTE J . BOOTHE, RITA F. HOCKMAN,
CAROLYN J . JONES, SHEILA F. LUCAS AND BEVERLEY Y . HOUSE:
Mike C . Moulton
Moulton 8, Long, PLLC
58 Public Square
Elizabethtown, Kentucky 42701-1425
COUNSEL FOR APPELLEE, PAULA M. OLIVE:
Jerry M. Coleman
Ryan Foster Quick
Quick & Coleman, PLLC
128 West Dixie Avenue
PO Box 847
Elizabethtown, Kentucky 42702-0847
COUNSEL FOR APPELLEE, REBECCA J. YATES:
James T. Kelley
The Kelley Law Office
115 West Poplar Street
Elizabethtown, Kentucky 42701